Investing in Mortgage Notes
A big challenge for many investors is finding a passive investment that generates cash flow while truly being passive. Rental real estate is often thought of as passive income, though anyone who has had experience being a landlord knows, it is anything but. Landlords are constantly concerned with the Terrible T’s (Tenants, Toilets, and Termites). Lenders, however, are less concerned with these issues, as they are the responsibility of the homeowner. When you invest in notes, you effectively become the bank, and as most investors understand intuitively, it’s good to be the bank. When you invest in real estate notes, you get all the advantages of being the bank, without the headaches of being a landlord. Investing with SourceOne Financial is completely passive and pays investors a cash return on their money on a monthly basis, filling this gap in income investments. Here are a few of the advantages to investing in notes with SourceOne Financial versus other real estate assets:
Lien Secured by Real Estate – The mortgage note is backed by the property itself. If a borrower stops making payments, you have the legal right to initiate foreclosure and reclaim the asset.
Low Leverage – Because the loan amount is lower than the property’s value, a decline in market value primarily affects the homeowner. The lender’s position remains protected by the existing equity cushion.
Mailbox Money – Most loans generate a 9–10% annual cash return paid monthly. When properly underwritten, mortgage notes can offer strong risk-adjusted returns and consistent passive income compared to many other investments.
Control – The recorded Trust Deed is assigned into your name which gives you control over the loan. While we aren’t going anywhere, if we were to disappear you would still be able to collect on your loan and foreclose on the property if something were to go wrong.
Passive – This is truly a passive investment. No collecting rents, no re-leasing properties, no midnight calls from tenants, no paying for property repairs. Just sit back and wait for your monthly interest check to arrive.
Liquidity – Short-term notes keep the investment horizon short, which reduces market risk and lets you re-evaluate your investment goals every few months.
Visibility – Unlike investing in a mortgage fund or private equity fund, you receive information on each loan opportunity and have the opportunity to review it and perform any other due diligence you like before committing to and funding the loan. You know exactly what your money is secured by.
No Property Management – Many investors have turned to rental real estate to create cash flow, but managing rental properties can be time-consuming and littered with problems. Being the lender means you receive the income, while someone else manages the property.
No Maintenance Issues – Every homeowner knows what it’s like for something to break and be on the hook for the cost to fix it. As a lender, all maintenance is the responsibility of the homeowner.
No Managing Tenants – Whereas rental property owners are concerned about vacancies in their rentals, the homeowner must continue paying the mortgage or you can take back the property through foreclosure.
Secure and Transparent Process
1. You provide the full capital for each loan, allowing you to retain complete control over your investment. If a loan amount exceeds what you prefer to fund individually, there may be opportunities to participate alongside SourceOne principals or other investors.
2. The loan is originated under SourceOne Financial, Inc., the entity authorized to issue loans. The company holds licensing in the State of Utah and is registered nationally through the NMLS (License No. 5627103-NMLC; NMLS ID 320102).
3. A formal Loan Assignment is recorded with the appropriate county office, transferring the loan into your name.
4. Our team manages all servicing responsibilities, including collecting borrower payments, issuing monthly interest distributions to you, and coordinating with the title company to prepare payoff statements when the loan reaches maturity.
5. Upon full repayment of the loan, you will execute a Reconveyance document to release the lien from the property.
Investor Requirements
Investors need to qualify as an “Accredited Investor” to invest with SourceOne Financial. An individual or an entity can generally qualify as an accredited investor if they meet at least one of the following criteria:
1. An individual with income exceeding $200,000 or joint income with his or her spouse of at least $300,000, in each of the last two years with the expectation to reasonably maintain the same level of income in the present year
2. An individual with a net worth exceeding $1 million, excluding their primary residence, either individually or jointly with his or her spouse;
3. An entity that has assets exceeding $5 million that was not formed solely for the purpose of making the investment; or
4. An entity whose owners all satisfy 1, 2, or 3 above.
Testimonials
“SourceOne funded my first deal and every deal for me for the past 2 years. Their service goes beyond just lending and therefore they have become a crucial partnership in my success in real estate investing. They are always my first call and are always ready to go.”
- C.B.
Safe. Fast. Trustworthy. Best Hard Money lender in Utah”
- E.K.
“I've been doing business with SourceOne for about 20 years. Dave and Bob are great to work with. Always on top of things and always close the deals quickly. Highly recommend them for your hard money needs!”
– F.M.
“They always put in the work to find/create a custom loan option. Even on unique or special case deals, they’re willing to get creative to make my deals happen. They’re local investors who understand the market. They’re trustworthy people and a pleasure to work with. I’ve bought multiple properties with different lenders and Bob and Dave at SourceOne Financial are easily the best.”
– E.K.
“Previous to working with SourceOne Financial, I had thought that, a winning real estate deal, only happened for big companies because they have the purchasing power, infrastructure, and cash to buy any good deal in this market. When I started working with SourceOne Financial, Inc in 2012, I had no idea how much financial power my business could gain. It has been a win-win partnership in which expertise with the right financial source has served as the perfect match for success. Having a reliable financial partner that can support you in less than 72 hours, makes all the difference in this competitive market. If I could describe SourceOne Financial in 4 words, they would be: Integrity, Professionalism, Supportive and Loyal.”